Property Insurance: Info Guide

Property Insurance

Insurance of property means insurance of buildings, machinery, stocks etc against Fire and Allied Perils, Burglary Risks and so on. Goods in transit via Sea, Air, Railways, Roads and Courier can be insured under Marine Cargo Insurance. 

Hulls of ship and boats can be insured under Marine Hull Insurance. Further, there are specialized policies available such as Aviation Insurance Policy for insurance of planes and helicopters. Thus Property Insurance is a very vast category of General Insurance and the type of cover that you need depends upon the type of property you are seeking to cover.

  

What is Property Insurance? Property insurance is a policy that provides financial reimbursement to the owner or renter of a structure and its contents in the event of damage or theft. Property insurance can include homeowners insurance, renters insurance, flood insurance and earthquake insurance.

Personal property is generally covered by homeowners or renters policy unless it is of particularly high value, in which case it can usually be covered by purchasing an addition to the policy called a "rider." If there's a claim, the property insurance policy will either reimburse the policyholder for the actual value of the damage or the replacement cost to remedy the damage.

Types of coverage in property insurance

There are three types of insurance coverage. Replacement cost coverage pays the cost of repairing or replacing your property with like kind & quality regardless of depreciation or appreciation.

Premiums for this type of coverage are based on replacement cost values, and not based on actual cash value. Actual cash value coverage provides for replacement cost minus depreciation. Extended replacement cost will pay over the coverage limit if the costs for construction have increased. This generally will not exceed 25% of the limit. 

When you obtain an insurance policy, the limit is the maximum amount of benefit the insurance company will pay for a given situation or occurrence. Limits also include the ages below or above what an insurance company will not issue a new policy or continue a policy.

This amount will need to fluctuate if the cost to replace homes in your neighbourhood is rising; the amount needs to be in step with the actual reconstruction value of your home. In case of a fire, household content replacement is tabulated as a percentage of the value of the home. 

In the case of high-value items, the insurance company may ask to specifically cover these items separate from the other household contents. One last coverage option is to have alternative living arrangements included in a policy. 

If property damage caused by a covered loss prevents you from living in your home, policies can pay the expenses of alternate living arrangements (e.g., hotels and restaurant costs) for a specified period of time to compensate for the “loss of use” of your home until you can return. The additional living expenses limit can vary but is typically set at up to 20% of the dwelling coverage limit. You need to talk with your insurance company for advice about appropriate coverage and determine what type of limit may be appropriate for you.